Chelsea has announced that its losses for the year 2005-6 are down to £80.2m – a reduction of more than £60m on the record 2004-5 deficit of £140.4m.

Despite the continuing free-spending at Stamford Bridge, which has seen a further £100m spent on new players in the past year, a 42 per cent reduction in losses has been secured.

Although the results still record the third largest debt in the history of the Premier League, chief executive Peter Kenyon will be encouraged that his mission to make the club break even by 2009-10 appears to be moving in the right direction.

However, the club's mammoth expenditure in 2004-5 entailed a number of exceptional items, including buying its way out of a sponsorship contract with Emirates, and terminating the contracts of several players.

The £80m figure is broadly in line with the £88m which was lost in 2003-4 – the first year that Roman Abramovich took over. However, the projected figures for 2006-7 look encouraging, with the new improved commerical deals beginning to take effect, and a slowdown in player acquisitions.

Kenyon said: "These figures demonstrate that the business is moving in the right direction with increases and growth in all the major income streams.

"Last year we took some painful decisions in order to help us achieve our long term business aims. This year's figures prove that was the correct decision.

"With increasing sponsorship income, television revenue, and ongoing success on the field, those positive trends are projected to continue."

Photograph: The club has announced that league ticket prices, the most expensive in the Premier League, will be frozen for the 2007-8 season.

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